Friday, February 01, 2008

Losing $30K in a BF's Hedge Fund & Other Big Goofs With Money

One woman lost $30,000 the old-fashioned way. She gave it to her boyfriend to manage. She invested in a hedge fund run by the dear BF. He's now sitting behind bars (grand larceny and securities fraud) and she has a fat $30,000 deficit in her accounts.

That's just a snippet of the great financial stories from the 12-page special section on "Women & Wealth" in the February issue of Town & Country.

My Reality Check: I can't relate to the size of the losses experienced by some Town & Country readers, but if I chop off a few zeroes, I can relate to the process. For instance, one reader regrets running through a $50,000 inheritance by spending "on inconsequential things." Likewise, about 10 years ago, we received $5,000 when an older relative passed away. We didn't waste all of the money, but I don't remember how any of it was spent. I wish we had just invested the entire sum.

Here are other major financial confessions from T&C readers.

Overreacting to stock market turbulence: After stock prices dramatically fell in 1989, one reader quickly unloaded a large portion of her investment portfolio. She was terrified that the securities would quickly become worthless. The Lesson: She realized that if she had thought and waited, she would have realized that her portfolio -- a collection of "sound investments" -- would have bounced back. "I would have been much better off," she told T&C. I've also made rapid-fire decisions that I have later regretted. Panic rarely produces smart long-term moves.

Fashion slave: A trendy closet can exact a hefty penalty, especially when a shopper heavily invests in expensive trends. "I've had to give more out-of-date clothing to charity than I want to admit," one reader confessed. The Lesson: Buy classic clothing. Don't heavily invest in flavor-of-the-month trends. If you have to buy trendy stuff, shop at deep discount stores.

Retail Therapy: "Using retail therapy to entertain myself during my forties, instead of applying focus and discipline with my earnings." -- T&C reader. Don't get me started on this topic.

Delayed retirement planning: "Not understanding in my twenties to invest in my own future.....I started when I was 33. Big Mistake!"-- T&C reader.

Star-struck by a well-known broker: One reader was overly impressed by an investment adviser from a high-profile firm. Feeling star-struck, she let herself be led into a risky money market account that was created by that firm. The account was touted as a high-returning investment vehicle. The reader lost 50 percent of her assets in that account. The Lesson: "[I] have never followed the financial advice of a supposedly licensed adviser again. I do my own research and invest in known, solid mutual funds with a long history of results."--T&C reader

Delegating inheritance decisions: One woman failed to take "an active role" in handling her inheritance. The Lesson: "After two lawsuits, I prevailed but lost a lot of innocence, time and the ability to trust the 'good intentions' of family." --T&C reader.

The other major mistakes related to women who invested too much faith in the investment decisions made by the men in their lives, including ex-husbands. More about that in a later post.

About Me: Writer, Mom and Journalist

I'm another spoiled writer, with fine tastes and a small budget. Author of a newspaper column about saving money. I have a fashionably frugal attitude: Live well, find meaning and stay on a budget.
Photo credit: Melanie Bell

Frugal Duchess Subscriptions

Buttons

My Disclaimer

The Frugal Duchess is not a health, beauty or financial professional. The material on this website should not be considered as health, beauty or financial advice.

Editorial & Advertising Policies

This website maintains an intellectual firewall between editorial copy (my posts) and the ads on this site, including the sponsored links. All posts and articles are independent of the advertisements.
In keeping with a policy of editorial independence:
1) There are no Posts-for-Pay articles on this site.
2) None of the written articles, including book reviews or media releases are paid placements.
3) As a freelancer for various magazines and newspapers, I have contracts with different organizations. Those contracts are also independent of my blogging activities and I'm not paid to mention any magazine, newspaper or media outlet.